Let's make a deal

Friday

Dec 14, 2012 at 12:01 AMDec 14, 2012 at 2:25 AM

If you had collected a nickel during the recent election campaign every time a candidate said jobs were his or her top priority, you could join the 1 percent. When Oregon's governor calls the Legislature into special session to make a deal with Nike that could mean 12,000 direct and indirect jobs over the next seven years and $2 billion a year to the state's economy, the answer should be obvious.

If you had collected a nickel during the recent election campaign every time a candidate said jobs were his or her top priority, you could join the 1 percent. When Oregon's governor calls the Legislature into special session to make a deal with Nike that could mean 12,000 direct and indirect jobs over the next seven years and $2 billion a year to the state's economy, the answer should be obvious.

Lawmakers are convening today in Salem to consider giving Gov. John Kitzhaber the power to negotiate with the sportswear giant or any other company that promises to spend at least $150 million and create at least 500 jobs over five years.

In return, the governor would guarantee not to change the way the company's state income tax is calculated for a set period of time, from five years to 40 years.

At first glance, it might appear as though Nike is holding the state hostage, and in a sense it is. But it's hard to see a down side.

The tax formula in question has been in place since 2006. Called the "single-sales factor," it taxes multinational corporations only on income they receive from sales inside the state, not sales in other states or around the world. The formula replaced a system that also included property and payroll factors.

It's not hard to see why multinational corporations such as Nike and Intel like that setup.

Nike wants the Legislature to promise not to change the formula. In return, it will expand here in Oregon rather than in some other state — and Kitzhaber says the company is being heavily courted to take its money and jobs elsewhere.

If Nike were asking to have its taxes lowered, or eliminated entirely, we might object to such special treatment. But it's not. It's simply asking for certainty that the way its taxes are calculated won't change.

Nothing in the proposal would prevent the Legislature or the voters from changing the tax rate, or implementing a sales tax.

Some critics have questioned why the matter must be taken up in a special session when the Legislature is scheduled to convene early in the new year anyway.

Nike wants the matter dealt with quickly, but there is a more technical reason as well. As a spokesman for the House Democrats explained to The Oregonian, the Oregon Constitution says laws regulating taxation take effect 90 days after the end of the legislative session. The 2013 session likely won't end until June, meaning it would be next fall before this measure would be on the books.

Other states are likely to offer Nike much more than the company has asked for here. But Nike is offering to expand in Oregon, giving this income tax-dependent state the benefit of thousands of new jobs. In exchange, it asks the Legislature not to move the goalposts.